Activist investor Elliott seeks to shake up Alliance Trust

Mon Mar 16, 2015 7:23am EDT
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By Nishant Kumar and Sinead Cruise

LONDON (Reuters) - Activist investor Elliott Advisors, the largest individual shareholder in Alliance Trust (ATST.L: Quote), is seeking support from fellow shareholders for a boardroom shake-up at one of Britain's oldest listed investment companies.

Elliott, which owns 12 percent of the investment trust, said in a statement it has nominated three new independent non-executive directors ahead of the company's annual general meeting on April 29.

"This initiative is the culmination of a process where we had sought to engage with the company on matters of corporate governance and business concern, but where we have not been met with any meaningful response," Elliott said.

The U.S. investment firm, which is Argentina's main hold-out creditor and is also famous for agitating for change at various companies in the past, including Actelion ATLN.VX, Telecom Italia (TLIT.MI: Quote) and Hess (HES.N: Quote).

Elliott said its key concerns included a "persistent underperformance" of Alliance Trust's investment portfolio against peers and relevant benchmarks, the costs of its investment management function and continued losses in its two operating subsidiaries.

Alliance Trust, founded 126 years ago and based in Dundee, Scotland, is structured as an investment trust, a listed company running a global portfolio of investments. As a result, the company's shares are prone to trading at a discount to the net asset value of its investments.

Elliott believes poor corporate governance and weak cost controls are largely to blame for a relatively wide discount of around 12 percent to its net asset value of some 3.2 billion pounds ($4.7 billion), according to the company's latest data.

The shares were trading up 1.7 percent at 504.5 pence by 1053 GMT on Monday.   Continued...

Katherine Garrett-Cox, CEO of Alliance Trust attends the final session 'The Global Agenda 2015' in the Swiss mountain resort of Davos January 24, 2015.    REUTERS/Ruben Sprich